A transaction cost approach to channel design with application to multi-channels settings

In this chapter, the authors unpack the use of multiple channels to market a given product or service from the manufacturer’s point of view. They briefly review transaction cost logic regarding safeguarding specific investments, promoting adaptation, and mitigating the under-supply of activities lacking good output measures as the drivers of governance forms in a channel. Then, they develop and extend this logic to incorporate three key forms of heterogeneity - namely, firm, outlet, and customer pathways as well as synergies between different governance forms.